Miu Miu moves in after Marc Jacobs quits space
Fashion brand Miu Miu is taking up a shop formerly occupied by Marc Jacobs on Canton Road in Tsim Sha Tsui, in the musical chairs of Hong Kong's retail real estate as thinning crowds of shoppers force brands to look for cheaper alternatives.
But experts are not convinced that there are enough brands willing to fill the space vacated by their peers given the dull outlook for the industry.
Miu Miu, controlled by Prada, will take up the space formerly occupied by LMVH's Marc Jacobs at Harbour City, according to sources.
The new shop is expected to open next month.
It is not clear if Miu Miu will continue to keep its shop at Peking Road, also in Tsim Sha Tsui.
Landlord Wharf (Holdings) declined to comment. Miu Miu was unavailable for comment on Tuesday.
The news of the relocation comes a month after sports brand Adidas leased the shop in Central that used to be occupied by US luxury brand Coach. Coach closed the shop in August in the wake of a drop in the number of mainland Chinese visitors to the city.
Adidas has rented the 13,000 sq ft shop for HK$4.34 million a month, according to the Land Registry - 22.5 per cent less than the HK$5.6 million Coach was paying.
"For prime areas like Canton Road, landlords do not worry about finding tenants," said Michael Chik, the managing director of agency Sheraton Valuers, which focuses on retail shops transactions.
But there are some landlords - especially those who do not own first-tier street shops - who are failing to attract tenants. "The fact is that some companies are consolidating their network in Hong Kong," he said.
Hit hard by slower growth in tourist arrivals and a drop in luxury sales, retailers are facing a challenging environment. Some have asked landlords to cut rents while others are opting to relocate.
Since last year, luxury retailers have been struggling in the wake of Beijing's anti-corruption measures, economic slowdown on the mainland, a weakening of Asian currencies and changing travel patterns of mainland Chinese.
The city's retail sales by value fell 5.4 per cent in August from a year earlier, after a decline of 2.9 per cent in the previous month as tourist arrivals slowed.
"Despite several movements in the market, this is a fantastic opportunity for fast-fashion and sports-fashion-related sectors to capture some prime opportunities that have not been available in the market for many lease cycles," said Tom Gaffney, the head of retail at consultancy JLL.
Gaffney said he believed such "movements" would lead to a more sustainable retail landscape in Hong Kong.
Chik said he expected landlords at Canton Road to come under pressure to cut rents when a number of leases expire at the end of the year and early next year.
Leases of at least 10 shops on Canton Road will expire between next month and next year.
Lease of the Puyi shop at 116-120 Canton Road will expire next month. Chik said the retailer, which has another shop on the same street, would give up the shop when the lease expired. Puyi leased the 1,000 sq ft shop three years ago for a monthly rent of about HK$1.7 million.
Asia Commercial Holdings rented three shops at Manley House on 86-89 Canton Road in 2011 for a monthly rent of about HK$6.3 million. The retailer has been planning to sublet one shop with an asking rent of HK$1.3 million aimed at reducing rental pressure. But it had yet to find a replacement, said Chik.
"When there is vacant shop, landlords of shops on that street will feel the pressure," said Chik, who said he believed rents for new leases on Canton Road would be 30 per cent below the old leases.
Retail high street rents in Causeway Bay, Tsim Sha Tsui, Central and Mong Kok went down by 26 to 43 per cent in the third quarter from their peak levels in the fourth quarter of 2013 and during lease renewals compared to the last rent a few years ago, according to a report by DTZ/Cushman & Wakefield.